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Measures to take when overindebtness occurs
First of all, it is important to know that when we talk about over-indebtedness the debt of the people is constantly getting bigger and bigger. The amount of debt is usually so big that they don’t know how to begin the repayments. Budget guidance The first possible measure to be taken in the situation of over-indebtedness is the budget-guidance. When someone has difficulties controlling his in- and outcomes, over-indebtedness might be a consequence. Through budget-guidance, the debtor learns to control his own financial balance, so the debtor is still controlling his own financials. Social workers help developing the financial plan and give advice, but the debtor has to take care of his own payments and the implementation of his budget plan (Eerste hulp bij schulden). Budget management. The second option is budget management. Equal as the guidance, the debtor learns to control his incomes and outcomes, but social service is in control. They make sure that every bill is paid, it is their responsibility, not the one of the debtor anymore. The social worker receives the incomes and pays the bills, as planned in the budget plan. So the debtor loses a part of his financial freedom by ‘letting’ the social worker control his money and receive his incomes. In return, the bills will be correctly paid and the debt will decrease incrementally (Eerste hulp bij schulden). Collective debt settlement This third option, is a legal procedure for structural debt problems. This settlement aims at the repayment of the debt while living a dignified life (Eerste hulp bij schulden). To start this procedure, the debtor has to get the permission at the labour court, yet it is not initiated by an executive title (a verdict of court, notarial deed, …). When admitted, a debt conciliator is named. He tries to succeed in an amical settlement. The debtor needs to deliver a detailed and current balance of his incomes, available goods of his family and his costs, debt. The judge is appointed to secure the dignified life of the debtor. The conciliator negotiates with the creditors, trying to find an agreement for a debt settlement. If the creditors and conciliator achieve an agreement, this deal must be ratified by the judge. The conciliator will still guard the implementation of the agreement and the incomes of the debtor. The debt should be neutralised within 7 years, if not, a part of the debt can be remitted (FOD Economie, 2013). If the conciliator cannot achieve an agreement after a year, a legal consequence should be taken. The judge imposes a settlement, which the debtor and creditors need to obey. The debt should be neutralised within 5 years, the rest of the debt will be remitted. But the judge can obligate the debtor to sell his house, car, television, … in reality, this only happens when the debtor has some valuable goods left. The conciliator will still receive the incomes and control the outcomes of the debtor (Eerste hulp bij schulden). From the moment of acceptance of this procedure, the debtor will not receive his own incomes anymore. He will only get a daily amount of money to pay his primary needs. In 2014 OCMW Gent had 174 active collective debt settlement procedures. 131 dossiers with an amical settlement, 2 with a legal settlement and 41 cases were expanded with some extra years (O.C.M.W. Gent, 2014). The statistics of the OCMW in 2015 show that the majority of the people in the situation of over-indebtedness, 94.67%, never been a part of a collective debt settlement. 5,33% of the debtors have been a part of a collective debt settlement before. Debt mediation The last option is debt mediation. A conciliator will try to make an agreement with the creditors about the payment of your debt. So the conciliator will negotiate your debt and will check your debt on credibility, prescription and legality. But the creditors can still refuse this mediation (Eerste hulp bij schulden). The government interferes again in the payment of the conciliator. For the people in debt, it is almost impossible to lower their debt when they have to pay a legal advisor. So the government founded a fond, ‘Fonds ter bestrijding van de Overmatige Schuldenlast’. The federal department of Economy is qualified for the payment of the fees of the conciliators, but only under some exceptional circumstances. This is in the case of total emission of the debt, partly emission of the debt. But it is also possible without emission of the debt. When the income of the debtor is not capable of paying the fees, then interference of the federal department of economy is possible. This does not mean that the FOD of economy repays debts, it is not an equivalent of a judge and it does not interfere in the settlement between the conciliator and the creditors (FOD Economie). The social workers and the conciliator decide on which part of the income the debtor can use for paying for his primary needs and which part he has to ‘save’ to repay his creditors. To decide on the living wage, the social workers use a reference budget. On the base of the composition of the family, a certain budget is captured for clothes, kids, food, … the debtor can use this as a reference for his outcomes and costs.